Over the last two months, a lot of traders that shorted Bitcoin (BTC) when it peaked at almost $20k have started cashing out within the $3k to $4k range. The cashing out of several long-term BTC short contracts accompanies the publicized cash of the BTC short contract of Mark Dow – a former International Monetary Fund economist – in December last year.
In an interview with Bloomberg on the 18th of December last year, Mark Dow said: “I am done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time.”
All through the last fourteen months of the worst bear market in the history of the digital currency market, Bitcoin (BTC) saw some promising rallies which many investors acknowledged as a potential full-fledged trend reversal. For instance, in February last year, the value of Bitcoin (BTC) surged from $5,920 to $11,780 at its monthly peak, showing solid traction backed by a high daily trading volume.
Three months after the enormous rally of Bitcoin from $5k to about $12k, the digital currency started another recovery, surging over the $10k mark in a relatively short period of time. Irrespective of positive technical indicators and the optimistic sentiment shown by a lot of investors in the digital currency space, traders such as Dow didn’t consider cashing out their short contracts for large profits.
Traders found the $3k level low enough to cash out, set their profits aside, and pay closer attention to the market.
Bitcoin (BTC) Approaches the Final Phase of Its 14-Month Bear Market
The value of Bitcoin (BTC) is likely to decline even further in the next couple of weeks as it approached the final phase of its 14-month bear market. Some experts in the industry including Vinny Lingham of Multicoin Capital, and Eric Larcheveque (the CEO of Ledger) believe the present digital currency winter could transform into nuclear winter and last up to two years.
In an interview with CCN, Larcheveque said: “We think we could have 12 to 24 more months of a bear market. Or some kind of nuclear winter in crypto. So we are just adapting the growth of the firm to make sure we can withstand two years of bear market.”
Nevertheless, even if the value of Bitcoin (BTC) decline below its $3k support level, which it has held firm over the past four months, the $3k level is a safe region to lock in profits and ride out a potential accumulation phase that might take place after a bottom is established. In order words, traders expect Bitcoin bottom to be established in a place not too far from the $3k region.
While the creation of a proper bottom could take a long time, analysts predict a recovery by the second half of this year as a result of some fundamental factors including the halving of the block reward of Bitcoin (BTC).
Bitcoin (BTC) Price Today – BTC / USD
At the time of writing, Bitcoin (BTC) is changing hands at $3,595 after an increase of about one percent over the past twenty-four hours. The current market cap of the digital currency is $63.81 billion and its trading volume over the past twenty-four hours is $4.45 billion.